Question

The cost of making a new skirt is $20. At a price of $15, consumers will demand 600 skirts, and producers will skirts.

Answer 1

The producers wll not supply skirts because it costs more to make them then it does to sell them

Answer 2

The correct answer is: "producers will NOT SUPPLY skirts"

The demand function represents the quantity of a certain good or service that producers are willing to offer in the market at different price levels. The law of supply states that there is a direct relationship between price and quantity suplplied (ceteris paribus, hence, given that the rest remains equal). Therefore, when the price charged increases, the amount that producers are willing to offers increases too.

Producers are not willing to supply a single unit at a price that is lower than the production cost, because they will be obtaining negative benefits, hence, losses. Only if the market price increases over $20, they will be willing to supply (as producing will become the option that allows manufacturers to maximize positive profits).